Small multi-family (2-4 units) buy & hold investment in St. Louis.
Purchase price: $306,000
Cash invested: $94,000
First investment property! This is a duplex located in Southampton. I found this as an off-market deal. It had been well tended by it's live-in owner and required very little rehab prior to being rent ready.
What made you interested in investing in this type of deal?
I've invested in one syndication, but I wanted to take a more active approach. I decided to look at small MF properties for my first deal. This seemed like a good entry point into the world of REI.
How did you find this deal and how did you negotiate it?
This was an off-market deal. I was looking at the duplex across the street listed on the MLS for $250k (wound up selling for $280k). As my agent and I were discussing things, the gentleman across the street asked if we were looking and mentioned that he was thinking of listing soon. We started chatting, asked to see his place, and found a good deal! He stated his asking price, I ran the numbers, and agreed that it worked for both of us. We were under contract the next day.
How did you finance this deal?
I financed this using a traditional 30 year mortgage with 25% down.
How did you add value to the deal?
This was a very well maintained property that had not been previously used as a rental. We did some light cosmetic repairs (new paint job and touch-ups to the sunroom), added dual laundry machines in the basement, and it was ready to go.
What was the outcome?
I closed on this in mid/late February, and it will be fully rented by the end of April. With reasonable values for maintenance, capex, PM, and fixed expenses, it should generated an NOI of a little more than $20k. After debt service, looking at cash flow of around $8k/year, yielding a CoC return of about 8.5% for the first year.
Huge shout out to BP and the rental property calculators for helping me with my analysis!!!!
Lessons learned? Challenges?
This entire process was a lesson learned. Everything was new: deal analysis, estimating rehab costs, all of it. The calculators were great, and my realtor was also very helpful. One of the bigger challenges (not to mention the current white hot market) was the price point. It initially appraised at $290k, but we were able to use 2 comps that closed the week of our closing to get a new appraisal of $310k. This helped with financing a lot.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Mike Maupin with Frontier Mortgage was my lender. The last comp closed the day before my scheduled closing, and they pushed underwriting through after the last comp with the new appraisal, and we were able to close 48 hours later.
I used Ryan Koppy with ReMax as my realtor. He helped me find the deal, get the deal, rehab the deal, and he's providing PM at a good price. Great experience from start to finish.
@John Whitfield congrats on your investment!
Congratulations John! As someone looking to get started in St. Louis I love to hear the success stories. Thanks for sharing the individuals you worked with, I’ll have to check them out.
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